US refiners file suit over EPA cellulosic ethanol mandate

12 June 2012 23:16[Source: ICIS news]

WASHINGTON (ICIS)--US refiners and oil producers have filed a lawsuit challenging a federal mandate for the use of cellulosic ethanol, according to court documents circulated on Tuesday, arguing that they cannot be obliged to use a fuel supplement that does not exist.

The American Fuel & Petrochemical Manufacturers (AFPM) joined the Western States Petroleum Association (WSPA) in alleging that the Environmental Protection Agency (EPA) may not lawfully impose what they call “a hidden tax” on fuels producers.

In January this year, the EPA issued its new renewable fuel standard (RFS), including the requirement that US refiners and importers of gasoline and diesel fuel must use more than 8.6m gal (32.6m litres) of cellulosic ethanol in their transportation fuel blends.

If refiners or importers fail to use the required volume of cellulosic ethanol, they must pay a $0.78/gal (€0.62/gal) waiver fee to the EPA.

However, as the AFPM and WSPA point out in their challenge, there is no commercial scale production of cellulosic ethanol available, and refiners and other fuels blenders cannot reasonably meet the EPA/RFS mandate to use the biofuel.Consequently, the groups contend, they cannot be fairly obliged to pay the $0.78/gal waiver fee.

Earlier, AFPM and WSPA had petitioned the agency, asking that the EPA drop the waiver fee.But in late May this year, the EPA rejected their petition, prompting the lawsuit.

In taking the EPA to federal court on the matter, AFPM general counsel Rich Moskowitz argued that “Congress gave EPA authority to waive RFS requirements when there is an inadequate supply of domestic biofuel”.

“If EPA is not going to exercise this authority in a year when zero gallons [of cellulosic ethanol] were produced and available, when would EPA use this waiver provision?” he said.

Moskowitz said that the EPA’s denial of the AFPM’s petition to drop the cellulosic waiver fee “is contrary to congressional intent and forces refiners to purchase credits from EPA for cellulosic fuels that are not commercially available and amounts to a hidden fuel tax on consumers”.